The dollar index hovered near two-month lows around 98.3 on Friday and was on track for a third consecutive weekly drop. The decline came as the Federal Reserve cut interest rates as expected and delivered a less hawkish outlook than markets anticipated. Chair Jerome Powell indicated that further rate hikes are unlikely, with Fed projections pointing to a single reduction next year. The Fed also announced plans to buy short-dated Treasury bills to support market liquidity, pushing yields lower and adding pressure on the dollar. Meanwhile, initial jobless claims rose by the most in nearly four and a half years last week, reinforcing a dovish rate outlook. In contrast, other major economies, including Australia, Canada, and Europe, are seeing hawkish repricing, further weighing on the greenback. The dollar is poised to weaken against most major currencies this week, with the steepest losses expected versus the euro.
